Medical Billing Rates – What Prices to Expect for Specific Billing Services

What are your prices? is the question medical billing businesses are asked most frequently. We'll try to clarify some of the ambiguity regarding medical billing service prices in this article. Also, we'll outline the precise services you may anticipate for a given pricing as well as the variables that affect that price.

Medical billing businesses have been around for a while, but over the last ten years or so, the industry's business model has seen a significant change. 

There are two basic causes of this change: 

1) Growth. 

The medical billing sector has experienced significant expansion in recent years, for a variety of reasons. The straightforward explanation entails a confluence of technology advancements and regulatory adjustments, notably more intricate coding standards (ICD-10), stricter privacy laws (HIPAA, HITECH Act), and rising adoption of Electronic Health Records (EHR) software. These modifications have made medical billing more challenging, which has raised the need for third party billing specialists among practitioners. 

2) Consolidation 

The medical billing industry, like the healthcare industry in general, has seen significant consolidation. Small, local billing companies used to dominate the industry. While they remain popular, their market share has decreased dramatically during the last decade. The entry of large, publicly listed EHR software companies into the billing sector is largely responsible for this drop. Several software providers entered the billing market in an effort to saturate it. They tried to automate the revenue cycle activities while charging inexpensive pricing. They have mainly failed in that regard. They have, however, captured a share of the billing market and have left a lasting impression in the form of generally lower prices. 

What it means: Growth and consolidation have created a more competitive but less defined market. For the customer, this new medical billing market has both pros and cons. The biggest problem, which we'll talk about later, is that clinicians don't always get the services they thought they were paying for. The biggest benefit has come in the form of lower billing prices. Medical billing companies no longer charge 10% or more on a regular basis. Billing companies of all sizes have had to lower their prices by a lot because of how competitive the market is today.

What are the current medical billing prices? 

As for now, advertising prices range from 3% to 8%. But the modern medical billing market is still in its early stages. Norms are still being established. Prices have only recently begun to level off following significant price fluctuations. 

Medical Billing Prices are often based on two main factors: 

1) The Client's Qualities 

Practice characteristics are one factor that will have a significant impact on the price quotes providers see. Because of the basic defining elements of their practices, some clients are more difficult and time-consuming than others. When determining what they can charge a client, billing companies consider several factors. The following is a simplified list of what billing companies prefer. 

• Size for practice (number of providers)
  
• Type of provider (MD/DO vs. NP/MS/LC/etc.) 
  
• Specialties (amount and type) 
  
• Count of Office Locations 
• Volume of claims 
• Dollar amount for each claim 
• Number of codes
  

Some of the above factors, such as practice size and number of locations, are more important than others. And, in reality, most practices are somewhere in the middle. The closer you are to optimal, the lower the rate you can expect. The higher the rate, the further you fall into sub-optimal territory. It can be difficult for some solo MDs to find a rate below 6%.

Certain providers, such as solo therapists, struggle to find a company willing to accept them as clients.  

Many billing companies simply cannot afford to accept certain clients. A company may have to charge more than 10% just to break even for some solo psychologists who require relatively comprehensive medical billing services. It's a sad reality that many individual therapists simply cannot afford such a high rate. 

2) The Particular Accounting Services Offered 

The other major reason for the 5% difference in medical billing costs is the wide range of services offered by billing firms and requested by clinicians. 

Let's be explicit about something. Medical billing businesses' days of large profit margins are long gone. Even those charging around 8% aren't earning a fortune. Their prices are higher because they offer a greater variety of services (often of better quality) to their customers.

Companies demanding 3% do not have thinner margins. They merely provide fewer (and generally inferior) services. So, when you see advertised medical billing costs online in the 3 to 4.5 percent range, keep in mind that those prices are there for a reason. 

In the end, hiring a billing business boils down to what is most important to the client: 

What degree of service do you anticipate receiving? 

How essential is precision in your revenue cycle? In other words, how expensive are denials? 
Do you anticipate the billing firm handling coding, claims appeals, credentialing, patient collections, data analytics, and so on? 
Do you require assistance with anything other than billing, such as HIPAA compliance, MIPS, pre-authorizations, and so on? 
Do you worry if your billing team is based in the United States or elsewhere?  
Do you want responsive, articulate customer support, for example? 
Do you require Healthcare software? Do you intend to retain your existing software? 
These are some of the issues you should consider. There are numerous options available.  
It is the provider's responsibility to determine the amount and quality of services that will benefit them the most. 

The Potential Services to Think About 

There are several steps in the modern clinician revenue cycle: 

• Entry of Charges 
• Submission of a Claim
• Payment posting
• Accounts Receivable 
• Claims Appeals
• Statements from Patients
• Reporting 

In addition to those steps, most modern practices require advice or assistance with other items such as:

• Enrollment and Credentialing
• Coding
• Collections from Patients
• Inquiries from Patients
• Pre-Authorizations
• Compliance with HIPAA
• Value-based Care (e.g., The Quality Payment Program, MIPS, & APMs)
• Options for Online Patient Payment
• Data Analytics

There are also other factors to consider, such as whether outsourcing some billing work is acceptable to you. While this can help reduce costs, it can also cause major problems if not done correctly and responsibly.

A practice may require assistance with all or some of the items listed above, depending on its size and staffing levels.

Average Medical Billing Prices: Expected Rates for Specific Services. An approximate chart. 

Key:  V   Likely provided   

          -    Varies based on the size of the client. Typically, an extra cost. 

          X   Not likely provided 

Description of the Graph: 

Note: The prices mentioned in the above chart are based on what a relatively "desirable" client might discover (see Section 1: "The Attributes of the Client" above). Less desirable clients may find that average rates are 1-3% higher than the prices mentioned in the chart.

The medical billing business has a few different pricing structures, but the majority are percentage-based (i.e., clients are charged based on how much their billing company collects on their behalf). If pricing is structured on a per-claim basis, you can bet that the services are minimal (i.e., comparable to what you'll find for a 3% rate).

Again, the various rates are determined by the services that are included. For example, some billing firms may charge an average rate of 5.5% for billing. All general revenue cycle stages, from charge entry to patient statements and reporting, are included in the 5.5% rate. Such a business may also provide credentialing, data analytics, patient collection assistance, and MIPS services as extra charges. Requesting some or all those charges would effectively raise the total billing rate to somewhere between 6 and 8%. 

This is the most important lesson medical professionals should take away from this article. If you're searching for a specific set of services, most billing companies (at least the reputable ones) will offer comparable rates, regardless of what they advertise. The trick is to discover a company you can trust that specializes in and, more significantly, presents itself as offering the services you require. A business that advertises a 3% rate will most likely excel at providing the services associated with that 3% rate.  

A business that emphasizes comprehensive, quality services rather than price will succeed at providing more comprehensive, accurate, and responsive billing services (at a rate likely in the 5-8% range). 

Remember what we discussed earlier when you eventually pull the trigger and begin negotiating with various billing companies. In the medical billing business, margins are relatively thin.  If a price appears to be too excellent to be true, it most likely is. So, remember what's essential to you during negotiations. Do you want to spend the least amount of money possible? Or do you want to make certain that your financials are optimized in a constant and dependable manners? 

Consider this. Two businesses are providing the same services, but one is charging 5% and the other is charging 6%. It is simple to select the lowest price. And perhaps that is the best option. However, it is more probable that 5% of the company's services will be less valuable in the long run. Perhaps the employees will take a little longer to respond to you. Perhaps the average number of denied claims will be slightly greater. Perhaps the business will be less consistent in notifying you of payer changes that may affect your reimbursement. But there will almost certainly be a distinction. Almost always, there is. It is your responsibility to determine what is most cost effective for your business. Will that 1% difference in price be more costly than the cost of slightly inferior work? So which company should you hire? We would recommend considering the advertising strategies of medical billing companies.  If a company advertises 3% rates, it likely excels at providing services at that price point. They may also provide more extensive services at a higher price point, but 3% is likely their sweet spot. They operate very differently than more expensive invoicing services. They outsource all their work and lack the necessary personnel to manage more complex revenue cycle tasks. If you employ them to perform complex billing work, they will likely outsource various steps to multiple companies, which is at best a risky practice. Therefore, if you want minimal services at a low cost, employ a company that emphasizes low prices. If you want comprehensive and dependable services, employ a company whose reputation reflects this.